tv Fast Money CNBC February 20, 2013 5:00pm-6:00pm EST
gains and heads back to 1400 in the coming weeks. >> craig, what about you? 30 seconds. what are you watching? >> oh, in the hodges funds we have several of our portfolio companies that will be reporting tomorrow. trinity industries reported this afternoon, should have a conference call in the morning. same with encore wire, look for further growth in both those companies. endskro reporting and look for reports from our deepwater drillers there and then lynn energy will have a conference call and an earnings report, a negative article in barron's will make that an interesting company to hear from. >> almost exactly time. what about you, kirsten? what are you watching? >> thanks, mandy. we're watching walmart earnings. report says the company had their weakest start to a february in seven years, could indicate pressure in that consumer, could have negative implications for the dollar store group. in edition, watching fifth and pacific. the company did preannounce
their earnings, but we are expecting positive commentary about the new kate spade saturday brand. and trends out of the project show in vegas this weekend kate that blue denim is back, should bode well for their lucky brand jeans. >> all of you, thank you for joining us. you had three seconds left, which in tv time seems like an eternity. thank you. bill? >> all right, as we head to the top of the hour and the "fast money" gang, let's show you what tesla is doing. slumping in the afterhours after reporting those earnings. wider than expected fourth-quarter loss. the company says it expects to report a first profit in the first quarter, but down 6.33% on an otherwise big down day. that's it for "the closing bell." thank you for joining us. >> thank you for watching, everybody. see you tasame time tomorrow. live from the nasdaq market site in new york city's times square, i'm melissa lee. here is what "fast" is following tonight. taking a toll. the luxury home builder dropping
today on earnings. is the stock priced for perfection? the ceo joins us. fool's gold? a dreaded death cross. but tim seymour isn't leaving the miners for dead. and office office. is the merger of office max and office depot good or bad for staples? dan and karen face off in the supply closet. first, let's get straight to today's action. the s&p and the nasdaq having their worst day of the year. the dow having its worst day in two weeks. so, the question tonight is, is this the beginning of a bigger correction? how worried are you that the fed is about to take away the punch bowl of easy money here? dan nathan, what do you say? >> well, of course it is the beginning. at the end of the day, i think there weren't too many surprises in the fed minutes, but the ones that took the market down were already baked into the cake in some wakes. to me, you mentioned toll brothers, the prior leadership from last year, the things that got us up to 1500 are giving up here. you know, on a day like today, apple was already giving up.
peel aren't looking at that as a leader right now, but toll brothers is telling a bit of a story here and something that's going to continue. >> seems like the tone of the fed is a little different. take a look at the minutes and there's one statement in the fomc minutes that get everybody's nickers in a twist. burying the piece in changes to the economic outlook, which we knew, changes in the economic outlook, if they get better -- >> nothing knew. >> or, as its eelvaluation of t e evefficacy evolved. >> one part that actually is working is that there's no inflation. there's deflation and they're still below their target rate of 2% and the fed can take both sides of that coin, so, the fact that six weeks ago, they doubled the size of their purchases, this is a little puzzling that suddenly there's a larger group holding up their hands. we know who is controlling the fed committee, but to me, this is not the beginning of our questions of this. we went through this six weeks
ago. not necessarily when they added it, but when we got the first round of fed minutes that started to question this. this will go on and that is for a market that's begun to already, if you look at the dollar, the treasury curve, commodities, have already started to evaluate some of this is coming out. i don't think that the markets are following through today totally on the fed. in fact, if you look at where we were yesterday, we saw metals and materials, the two-day moves are shocking. it's not just today. and this is before the fed. >> eed knickers are extraordinarily painful. >> it is painful. >> he said it. >> listen, you'll get comments out of the fed to the contrary at some point. my sense is they are just throwing out test balloons, in my opinion, to see what kind of reaction we get in the market. but it comes down to, what do you think is going to happen in the broader market on the back of this? and i've been saying 1550. we got up to basically 1531, give or take, so, we made a new 52-week high in the s&p and closed lower, lower than
yesterday's low, so, it's not that big a deal but you had an outside day. what you are setting up for potentially now is not only an outside day, which we had today, but potentially an outside week, if we can get below 1498. potentially an outside month, which would say to me, then it's over. so, maybe the 1550 i was looking for, we won't get there, but it's an interesting day. you had a lot of reversals, something worth watching. your answer about the fed is, i don't think it's -- i think it's just the fed seeing what's going to happen. >> and if we -- if they did take away key wee, would that be the end of the world? if it's in the market doing something, it's not working, or the economy is better -- >> or they think it's working. though, when i think about it, i don't know what i want to react to just on today's news, but when you think, you try to assess how many people are in the market with the theory, don't fight the fed? that's it, that's the whole unsdz lying this heiying theer .
you have to front run the fed now because the fed, the easing's over, it doesn't matter about fundamentals and all that. if you have tons of stock to go, they're trading lower. i'm not going to react off that. >> but where do you go now? where is the leadership going to be in financials have led us here. we had home builders, technology. technology did not make a new high, as major super sectors did. we saw the runaway breakouts in proctor, people are -- >> proctor, general mills. >> the list goes on and on. >> is that the safety trade here? >> these are companies that are growing at mid-single digits trading at all-time highs. where do you go for leadership in the equity market? that's why we have to cool out. we need to pull back. otherwise, i don't know what the heck you buy. >> and the markets are telling you through the form of volatility for the first time, really, all year, that people feel uncomfortable. and it's -- yesterday, i wrote something on emergingmoney.com that em volatility was lower than its been since 1997, before the asia crisis, before we knew what crisis was and today was
the first time, you look at the iwm, 2% move, by far, the biggest move of the year, so, the market has responded. and i think the market is really telling you what you need to know. >> let's get more on today's selloff. let's bring in alec young. alec, great to have you with us. >> great to be here. >> what do you make of today's selloff? >> well, i think, you know, you live by the fed, you die by the fed. and clearly, you know, that's been the big overriding bullish theme, not only in the u.s. we have japan piling on. we've got europe, maybe, you know, getting in on the act. so, this record global liquidity has been pushing investors into riskier assets. and even though today is not, you know, a death knell for qe, it certainly gives people the sense that there's a little bit more disagreement on the committee than maybe people realized. we're starting to see more vocal concerns about the qe that's going on, and the conditions around unwinding it. so, i think that coupled with
the fact that we had one of the most overbought markets in recent memory, i don't think you can be too surprised by the big pull back here. >> what's your bottom line directional view of the market at this point in time? is it lower? >> we think -- we've been saying that we thought we'd get back to 1550, 1575, retest of the all-time highs and then we were looking at a pull-back from that level. it may be that was too aggressive and that pull-back's already begun. bull our core view is that this is just going to be a pull-back. we don't think the felt's qe party is over. we think people will come to kind of get that as they get this news in the coming days. we think you want to be a buyer of the volatility, but probably no need to do it tomorrow morning. let this thing shake out a little bit. >> buyer of what then? >> we'd be buying largely cyclical plays. we've been playing discretionary, industrials, those have, whoed very well. but also health care has been strong. so, we continue to stay with that, most lick cyclical cocktail into any weakness here.
>> all right, alec, great to have you with us. thank you for your time. alec young. all right, so, just quickly, if we are in a temporary pull-back, what's on your shopping list, just out of curiosity? >> there's some financials. they've had such a run, i would wait to have them pull-back a little bit more. names at macy's, below 40, i would like to buy more than that. >> dan? >> cyclical technology, cisco, yahoo!, kind of interesting if you can get them back to levels, but they've run up a lot, on decent news, so, you want to wait. >> shopping list, tim? >> emerging markets haven't really run this year and there's a number of names, some of the big cap, the banks in bra si, so some of the telecom names. >> he used the health care woli stock made an all-time high. >> and mike khouw, what's on your shopping list? >> i would just go with an etf like ewj with its exposure to
brazil and maybe surprisingly, just on a cheapness basis and because i'm not trying to chase the richest stocks here, a name like caterpillar, believe it or not. >> is it time now -- >> for what? >> to start selling the high flyers? we talked about the shopping list, so, do you sell -- >> apparently yesterday was the time. i think -- >> yes, that's true. >> go ahead. >> if you thought the rally would continue and there are cracks in the rally, you might be questioning some of your holdings that are at all-time highs. >> good time to play that game. >> hold 'em or fold 'em. >> bingo. >> that is fantastic. >> first up, colgate, soaring to a record high. tim? >> this is a case where you fold 'em. the berkshire deal had a lot of people frothing up on these food or product companies, but at 21 times earnings, well ahead of its peers, people are looking at this. i would fold them.
>> all right, next up, honeywell, surging to an all-time high. guy? >> i loved honeywell. i know, in your mind, you are saying guy is going to say hold 'em, i know guy so well. you know what, no. >> actually, i thought you were going to say -- >> fold 'em! >> i think assuming that melissa was in your mind in any way is a bit presumptuous. >> listen. >> i try to stay away from your mind, but -- >> well, you should. but you mentioned all-time high. this is basically, go back to '98, where we made similar highs. so, you have potential for double top here. we talked about honeywell instead of ge. fold 'em and move on. move on. >> so far, twofolds. next up, morgan stanley. the bank is selling $4.5 billion in u.s. bonds, marking its largest u.s. debt offering in two years. karen? >> i actually would hold 'em, being prepared for a bumpy ride. >> hold 'em! >> okay. >> that is another great sound
effect. >> really distracting. >> next up, wendy's trading at a four-year high. recent improvements in a new menu. barron's looked at them as a possible takeout target. dan? >> there's new money in there. four-year highs. the thing is up 20% this year alone. only expected to grow sales 4% a year. trades at 30 times, 2013 earnings at a huge premium to its peers. but again, on the fundamentals alone, i'm not sure you buy this stock at four-year highs. if you are one of these people who like to put -- >> tradedown thing? they don't go to the casual restaurants, they're going to go down and have a frosty -- >> these guys are exposed to north america and what we've seen from kfc and we've seen -- these guys are having a tough time right now in the u.s., you know, so, to me, you wait for a pull-back on this one. >> can i -- i have a question. >> your hand is up. >> do you know how to play? >> now wait. do you play hold 'em or fold 'em? apparently not. hold 'em or fold 'em. you have to answer! come on! one or the other. >> folding. >> thank you.
>> take down and throw the graphic up. >> all right. >> i mean, come on. fold 'em! >> i want to hit cisco hear -- >> fold 'em. >> just in case you missed it. mike, cisco, hold 'em or fold 'em? >> i mean, i'm skeptical about a lot of stocks here, but this one actually, not quite as much as everything else. i would rather own cisco at 11 times full year than proctor & gamble at 21 times. you can hold this one here. there's -- >> hold 'em! >> probably go first. >> guy approves of your -- >> great job by mike with the hold 'em. >> so, it's clear this everybody's mind where he stands. >> well. >> let's get a market flash here with josh lipton. a name that's seeing a huge drop in the afterhours session, one that's traded here on this desk. josh, the latest? >> hey there, melissa. veriphone reports and disappoints. saying that first quarter results will be well below what the street wanted to see. the problem, says the company, weakness in europe and project e delays among other issues. they see first quarter adjusted
profit between 47 and 50 cents per share. on revenue, $424 to $428 million. they wanted to see 73 cents on $492 million. veriphone down 32%. melissa? >> karen, this is a name you have been short. >> yes. >> congratulations. >> well, thank you. every once in awhile, my colleague, adam crocker, got to give hi kudos for excellent work. to me, i'm actually a buyer right now, to cover some. the risk/reward has changed a lot with the stock down this much. the problem they have is the transition to a services -- more services model from a hardware model. you tried to get at that when you interviewed and it's hard to get an answer out of them. so, this is not shocking news. the magnitude of it, maybe, but -- i'd much rather be long something else in the space. >> covering your short.
>> yeah, just the risk/reward has changed a lot. coming up next, he runs the largest luxury home builder in the united states. toll brothers ceo doug yearley is here to discuss the latest earnings, the housing recovery and much more. plus, the signs pointing to a u.s. manufacturing comeback and how you can trade it. as we head to break, look at today's weakest sector movers. much more "fast" right after this. how do you keep an older car running like new?
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okay. [ male announcer ] with citibank's popmoney, dan can easily send money by email right from his citibank account. nice job ben. [ male announcer ] next up, the gutters. citibank popmoney. easier banking. standard at citibank. some of the housing plays taking a hit today. home builders like lennar and pulte group among the worst performers. toll brothers with operations in 19 states had been riding high as the housing market continues to recover. the stock is up 80% in the last three years. shares, though, taking a hit today after the company's fiscal first quarter rnings disappointed the street. here to break down the results and what lies ahead is doug yearley, ceo of toll brothers. doug, always a pleasure to see you. >> thank you, very much. nice to be here. >> i want to talk about why investors were disappointed with your earnings, of course, the miss was a big reason, but also, when they dug through the numbers and looked at the
average prices for homes delivered for the quarter, that declined sequentially quarter on quarter, as well as year on year while the national trends have been indicating a gain quarter on quarter and year on year. can you speak to that? are we just focusing too much on this one metric? >> i think so, you know, today was also a tough day to report, with a lot of other things going on. i think the investors understand our first quarter is always much slower on deliveries. our houses take longer to build. we really saw the increase in orderers the second half of last year. which means we're going to have really good deliveries in the third and fourth quarter of this year. and when pricing, that's a tough comparison. it's really a mix issue. depends on which communities are delivering. and i think the investors understand that also. there may be surprise, we haven't changed our naum berps for the whole year. i think most understand that we're going to have big numbers in the second half of the year. we love where we are right now. we have pricing power, demand is
really coming back strong. you know, our orders were up significantly, 49% -- >> right. >> and in the first three weeks of this quarter, the first three weeks of february, our orders are up 40%. we're buying great land, we're really feeling good about 2014, 2015. >> sure. >> and i think we'll be fine once the second half of this year kicks in. >> a lot of analysts were acknowledging the fact that home prices, they're a little bit lumpy depends on the delivery and the mix, but in terms of the number of homes delivered, it came in 100 fewer than expected, according to analysts. i'm wondering if we should expect that to be pushed out to future quarters and you'll be up 100, above consensus, in this quarter, maybe the next? >> yeah, well, the good news is, it's in the backlog. we've sold these homes. we now have to deliver them. i think you'll see most of those deliveries occur in the second half of the year. and, again, i think maybe the analyst numbers got a little bit out ahead of ourselves. and we're doing our best to explain it.
i think we'll be fine. >> you're getting -- >> like i said, the great news -- >> sorry, doug. i wanted to get into the next area of business that you have, a pipeline for, and that's the rental market. 4,000 units, as well as two student housing projects. i'm guessing that you see no letup in terms of rental rates right now. >> yeah, you know, we've decided that it's time for us to get into the rental business, a little bit more. for sale luxury home building is still our core business but it's a great hedge. we certainly learned that through the last few years. plus, we have the land acquisition people. we have the builders. we have a great brand. you're going to see more out of us on the multifamily side. and yes, absolutely, the multifamily rents are going up significantly. we'll be doing this off the books, and we're really excited about it. think it's going to be a great business for us. >> and i'm wondering, doug, because we heard about so many
investors, starting these funds that invest in foreclosed single family homes that they convert to rentals and i'm wondering what your opinion is, what the impact of that takeup of inventory is on the entire housing market, more specifically, your neck of the woods, the luxury new homes? >> i don't think it's had any real impact on our end. i think it's certainly firmed up the lower end in certain markets. phoenix is a great example. a year and a half ago, phoenix had 15 months of inventory overhang. it's down to four months now. and part of that is, the builders stopped building spec houses. and part of it is, these investment groups were gobbling up some of the foreclosed and distressed inventory and, of course, our buyer generally has a home to sell, so, even though it doesn't effect us directly, it's in the daisy chain of our buyers. >> and quickly on cost, doug, what do you foresee as cost? people are saying, oriented strand board, it's becoming more rare and going to get more expensive at this point.
>> costs have been creeping up. we are managing it. fortunately, we're able to increase the price of our homes as demand increases more than costs. but lum beryl is one example. it's the cost leader right now in terms of increases. we're keeping a close eye on it. but fortunately, the market is strong enough that we're more than juf setting those cost increases. >> doug, always great to see you. >> thank you very much. >> doug yearley. where do you trade the home builders here? a lot of the home builders, nice runs over the past year, two, three years. >> quickly on toll, i mean, they have, a day like today where people started to question some global growth, whether it's because of the fed or not, they have a lot of leverage across a not. they have been distract and something investors are in concerned. at a 15 almost times multiple, there's not enough left there. this is not a terrible story. this is a very good story that's priced itself into a place where you don't think you need to own it. >> a lot of good things in that
backlog, but here's a stock that's at a seven or eight-year high. basically on that high so, to tim's point, i don't see any come peopling to go racing in. >> would you go to lbx or boise cascade on this noigs that plywood is rising? >> and that's why all along it's been the home depot trade. >> yeah, but why go there now when these stocks already reflect it? to me, congratulations, mr. bernanke, you reinflated this bubble. this was trading five years ago, when it had $4.50 in earnings, expected to have a dollar in earnings now. these stocks reflect any -- >> stay away completely? >> yeah. >> but you made that argument six months ago and you missed for the past six months. >> i did. but right now, we're starting to see and i know these guys are high end home builder. we're starting to see serious head winds that may be or may not be, is american going into an austerity period here that walmart e-mail, i know it doesn't speak to the toll
builder buyer, but with $4 gas at the pump here, this is -- could be a challenging time. >> let's hit today's buzz kill here. >> it wasn't me? >> really. apple down about 2%. 2.4%, now pacing losses in the broader market as well as in technology. the stock falling on news that a major manufacture for apple in china is freezing hiring. word on the street is that demand for the iphone 5 has slowed which is why the plant doesn't need more workers. they refuted that claim, saying due to an unprecedented rate of return of employees following the chinese new year holiday compared to years past, our company has decided to slow down the recruitment process. this is not related to any single customer and any speculation to the contrary is false and inaccurate. coming out very hard, but -- >> must be long apple stock. >> yeah, they are, in a big way. >> well, we talked about this, it was hit across the board in terms of the component makers and other parts of the hard drive makers. you can agree with them when you say that. when you look at apple in china,
one of the things people should get excited about, china mobile's 3g network is making progress. people think if apple can come out with a phone that's 330 bucks, they can increase their selling space in china by three times. that is what people want to see. that is the answer for apple and until they do that, i think the stock is range bound. >> quickly on apple? >> that headline hit the stock this morning, trading $451, rallied all the way back, closed on the dead low. the stock is dead money. >> all ill know is that statement they made isn't true. i don't know which parts of it are lying, some may be true, all, you know, some paragraphs, i don't know. so, i don't want to trade off of statement that i know is not accurate. >> why do you know it's not true? >> what in the past have they said -- i don't know. anyway. >> okay. hewlett-packard weighing in on the news in a statement saying that hp does not manufacture pcs at the foxconn site. hp has a very diversified
supplier strategy unlike other companies who are more dependent on a single vender. there have been speculation that perhaps it was hp that had demand issues so foxconn was scaling back because of hp. >> though they had no particular customer. >> that's why no particular customer. anyway, hp, mike khouw, what do you see in the options pits? >> we saw quite a decided sentiment shift in the options market. because earlier today, it was mostly bearish, probably the most active was the 16 puts. but later in the day, the 17 1/2 calls, the weekly 17 1/2 calls, ones that expire at the end of the week, these things became most active. trading around 30 cents. over 20,000 of those traded hands. the sentiment going from mildly bearish to pretty bullish in a bet the stock could be above $17.80 by the end of the week. >> all right, of course more "options action" every friday on cnbc at 5:00. still to come, investing on
the homeland. how you can profit on the companies moving manufacturing back to the united states. but first, why this office supply super store is creating tension on this set. you can feel it, in fact. it's not over -- >> look at how wound up karen looks. >> overwhelming. street fight between karen and dan coming up next. stale tuned. ♪
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acquisition of the remaining state in grupo modelo. they are going to jointly approach the court to request a stay of all litigation until march 19th. bud is in the green in the afterhours. constellation enjoying a nice pop, as well. melissa? >> thank you, josh lipton. you sold your stz? >> i sold it last week when it got up to $43, which is the level it's at. they already announced what it will be, crown will actually get, constellation will get all of crown, the exclusive distribution rights. >> the bear's taking a chunk out of staples today. shares off more than 7%. it comes after staples popped on news yesterday that office depot and office max are planning to emergency. they announced that merger today. the activity sparking a street fight. karen is the bull, dan is the bear. 90 seconds total. karen, you're up first. >> i'm the bull on staples because this is an industry that is so ripe for consolidation.
you have a very, very thin margin and very high revenues and staples is a huge, huge competitor here. those other two are dying, even together -- i think -- i don't know what their future is going to be. but the merger is good for staples in that finally you may see some pressure on prices start to abate. that's going to be great for staples. they do such a big top line and staples is the number two retailer on the internet. they are second only to amazon, who is obviously a big competitor in the space. and staples on valuation, right here, even without the merger is not to expensive. with the merger, i think it's great. five years down the road, i don't know what happens with them. but right here, this merger would be outstanding for staples and i'm a little more optimistic than bearish dan on employment in the u.s. and i think that just helps staples -- >> well, karen, you make some fine points here, but here's one. americans or people in general are using less paper. i actually see the top line that you talk about, i see it
declining. analysts expect it to decline. it is declining. not an expensive stock. but earns are expected to be flat for years to come. sales are declining here, so, to me, there's really hard to make valuation case here. you mentioned amazon, okay, these guys are going to eat their lunch. i don't care they are number two to amazon. amazon doesn't need to make a whole heck of a lot of profit to sell a lot of volume here and i think they will come after these guys in a big way. the other point is, i don't think it matters how many crappy number twos, threes, fours, consolidate here. i think this is a secular -- >> doesn't there sort of a notion of a circuit city -- i'm going to throw it to these guys here. at least in the short-term, to karen's point, as office-office figures out it's ceo, because it has to figure that out, going to be doing a search here, as it figures out its strategy, its name, isn't there an opportunity for staples? >> well, i think the opportunity for staples was yesterday. and the point about amazon is point. independents, other online
discounters, this industry is in decline. so, karen actually said, she doesn't know what's going to happen long-term, but in the here and now, i think straple's valuation is where it needs to be and it will probably go longer because this entire part of the space is going to be troubled. >> so, you are bearish? >> we had a fight about best buy. it's all the same world. >> same sort of decline. >> i think the ambassador makes an excellent point. so, on the back -- i'm with dan, mr. risk reversal. >> weren't you a bull on best buy? >> when? where? >> i was afraid i was forced to be the bull. >> forced? now you're recanting? >> you know what? let's not look back, mel. let's keep looking forward. staples, i wouldn't own it. >> tweet us and tell us who won @cnbcfastmoney. >> excellent. the big driver bringing manufacturing jobs back to the united states and how it is changing the way big companies do business. back right after this. [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page,
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and in the afterhours session, for gold, after 2:00, we did see gold drop further on the back of the markets decline. so, should we be more worried about the miners at this point? >> and i think you should be. there's a couple of technical things. karen talks about, whatever you wanted to say was a reason for gold rallying, same thing on the selldown. there is no inflation. there is a global economy. and it's proven that the fed is ahead of the curve. if you look at what's going on with the price of gold here, people are talking about the death cross. i would say that gold at an 11 rsi and getting back to the lows of may, is way oversold. you're effectively at a double bottom. almost three standard deviations away from the 100 moving average. so, this, you know, this chart doesn't scare me. it may be an opportunity. but with the gold miners, one of the things we're looking at, if you see, if you listen to gold fields, if you listen to one of the russian gold producers last week, said they were putting their hedges in gold back on. so, the correlation of gold miners to the metal is something that may be ending. and i think gold miners are
going through a transition and it may be slow, where people will look at them as yield plays and not growth plays. i would like to see them leave the high cash flow behind, generate yields, dividends. this is what we're seeing. the valuations are interesting here. the miners, i like. either harmony, who's already tested some of their most recent projects. they are investing in places that are some what volatile, the political aspects of gold are ke keeping prices high. >> is barrick going back in on hedge? >> we'll see. investors who have pushed the gold miners to take off their hedges will have pushed them back into it and that will mean that the gold miners will less correlated to gold, so, i like barrick, because i like their projects, are in less politically unstable places. projects are not viable and they are under pressure. >> all right, mike khouw, i want to go with you. a lot of call buying? what did you see? >> no, there definitely was.
we saw substantial call buying in newmont. they haven't really timed these a that well. if gold has any support, it's because the miners are starting to hedge it here. what's important to remember, the way they do, you know, the cash costs for gold extraction versus their all-in costs, the miners, one of the reasons they don't have so much leverage to increase gold prices, because the cost of $13.50 an ounce to get it out of the grounds and you're not getting the more than 2 million ounce finds. it's very hard for me to get really optimistic about the miners, almost at any stage, because they tend to fail to deliver. >> all right, let's move on here. the question of how to grow u.s. jobs continues to be a hot button political issue. america's unemployment is about 8%. could the return of manufacturing to u.s. soil be the solution? president obama addressed the issue directly in his state of the union address last week. >> after shedding jobs for more than ten years, our manufacturers have added about 500,000 jobs over the past three.
caterpillar is bringing jobs back from japan. ford is bringing jobs back from mexico. and this year, apple will start making macs in america again. >> but with the strengthening dollar, can u.s. companies actually afford to bring jobs back to the states? and is reshoring as it's known a trend you should be investing in right now? let's take a deeper dive with the chief investment strategist at fifth third bank. jeffrey, great to e so yosee yo. >> obviously, it's not as easy as flipping a switch to bring jobs back here, so, what is sort of the price, the baseline price, which would make sense, this reshoring trend continues when it comes to nat gas being low? >> i think it clearly makes sense in here and probably for the next decade. if you look, it's also, it's not just the price today, but it's the trends going forward, both in currency, gas prices and labor costs. >> hey, jeff, it's tim.
currency, this is a place where i'd be concerned. i think the best days of the weak dollar helping manufacturers and the fed, they won't say this, but the weaker dollar has been their best friend. i think the currency is going higher. today we broke out through the 200. what do you think about that? >> well, clearly we have the collar strengthening against some currencies. the question here is, against which currencies? if you have a dollar strengthening against the euro, that has less impact on this story. the real currencies to watch are current sip cies are like china brazil. you have to look at those current sips and they seem to have intact uptrends, plus, a new focus on liberalizing those currencies, making them fully convertib convertible. >> rising wages in asia, that's certainly going to be a key driver, but there are certain industries where you really can't bring the jobs back here because there's a skills gap. so, foxconn may be a major supplier, major component manufacturer, major place where products are actually made and put together because we simply
don't have the people here in the united states to do that. so, what industries are actually prime for this reshoring trend? because i want to try to get a trade out of this, jeff. connect the dots for us. >> sure. well, first of all, we think the skims gap is overblown. you're seeing a lot of public/private partnerships that may help address that. doesn't doesnmean there aren't to be manufacturing jobs y s al over the world. we're seeing core manufacturing. jobs that have -- jobs that are energy intensive. anything that bends or melts metal tends to be tied very much to energy costs. so, you're seeing aluminum companies, we think, will be the next one to fall. you're seeing companies that manufacture metal items like masterlock are coming back here. you're seeing energy, intensive manufacturing like the auto industry, the president in the state of the union specifically mentioned ford, but it's more than ford, it's japanese
automakers like nissan, shifting production here, as well. but to get -- >> appreciate it. jeff. >> thank you. >> question here for an investor, though, is this a trend worth investing in? >> no, i don't think it makes companies more investable or better trades. i think he spoke about the chemical sector, i think that's an interesting sector, still. eastman chemical had a rough day today, down 5%. but i think the chemical still works, so, no, i don't think it's investable. the chemical space, if you had to look some place, that's where i'd be. coming up next, how to play the dollar after the british pound gets pounded. and later on, afterhours section. tesla out with earnings. we're on the conference call for the very latest. much more "fast" straight ahead. to grow, we have to boost our social media visibility. more "likes." more tweets. so, beginning today, my son brock and his whole team will be our new senior social media strategists. any questions? wouldn't it be better if we just let fedex help us to expand to new markets? hmm gotta admit that's better than a few "likes."
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think will give it further momentum to the down side. the bank of england minutes caught the market offguard. bank of england governor mervyn king actually did vote for more quantitative easing and he was outnumbered by his colleagues, so, he lost that vote, which is quite bad for any central bank governor and a bit embarrassing. so, that sentiment also weighed on the pound. so, i would like to continue with this downside momentum. i would like to short pound against the u.s. dollar. just slightly higher than we're trading now when i left the trading floor, so, i enter a short at 1.5260. and we're going to put a target, all the way down at 1.4950, through 150, the big figure and a stop up at 1.5460. >> amelia, see you on friday. coming up next, defense stocks on a roll. how drastic budget cuts by the federal government could effect this rally. plus, the latest afterhours action in tesla. back after this. with fidelity's
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phil? >> hey, melissa. we're listening to the earnings conference call. they are getting a fair number of questions on two issues. most of them resolving, the number of reservations and the backlogs for the model s. at the end of q-3, it stood at roughly 13,000 reservations. it is now over 15,000. and he was asked point blank, what's the wait? how long are people going to have to wait for a model s? he said on average it's five months. he knows that's not ideal, that people are going say, i don't want to wait that long. he safes, ideally, they would like to work that down to less than a month. they are going to be increasing production as they have stated for some time, going up to 4,500 model s sedans being produced in the first quarter, andn 20,000 for this entire year. and then the second area of questions, is all resolving around tesla saying that it will be profitable in the first quarter, that's an increase, or a move up, compared to where they were before when they said they would be profitable in the
third or fourth quarter. they say this is a reflection of the increased production of the model s sedan. we're going to jump back onto the call, but those are most of the questions and comments so far. >> all right, phil lebeau, thank you. and we were just showing video of phil in the tesla he was driving up the east coast, stopping to recharge the car. >> maybe go to the bathroom. >> don't get too lost, because if you get lost and you run out of the charge, you might be stranded. that's a problem with an electric car. >> don't get lost. that's why you drive with me. hang out with me. hang out with me, you drive me, you won't get lost. i'll get you -- >> isn't that the same, though, with gas? >> there's a lot of filling stations. how many electric charging stations -- >> point taken. >> just pull up to somebody's house. how are you doing? just plugging in here. >> this stock, though, is uninvestable. the valuation is absurd -- >> talked about that backlog, 13,000, you have to reserve one of those, you have to put down $5,000. that's minimum.
ill saw one of these on the road the other day -- >> is that good or bad? >> good for the backlog. >> wait a second. >> here's the street fight. >> how much are the cars, though? >> they start at $60,000. >> $5,000 is not that much. >> tim's probably got -- >> the question guy, tesla versus motley crue. >> tesla. >> you always got to go there -- >> quickly. >> finerman and i got in a street fight in gm and she looked like she was right, now it's back down. >> calling her out? >> he should. that's cool. >> some of the rhetoric out of the auto industry has not been good. >> so, you're -- >> i'm still thinking gm goes lower. close at 27, i think it's this way. >> let's talk defense names. >> oh, sure. >> they have been holding -- held up earlier today before falling with the rest of the market. but the defense sector touching an all-time high today, just a few days away from the sequester. some of the best performers in the philadelphia defense index aren't the big defense companies. they are the gen corps, the ges,
itts of the world, et cetera, but still, it is amazing that this group can move higher even with the sequester staring them in the face. >> i don't know if it's buy the news, sell the sequester. not trading it. >> you recall, young lady, we said in the fall, don't be fading these stocks into this thing. that -- i used it -- karen uses this term. spring loaded. didn't we say that? >> spring loaded. i remember that. >> some of the major names have not done well. lockheed martin, $87.75, that stock's big. so, to your point, some of the smaller ones doing well, some of the bigger ones aren't. the sector as a whole goes higher. >> even beyond the sequester? all right, we'll see. you tweet it, we trade it. let's get the tweets that you sent to us today. this one is for guy. james tweets, "i'm in my first trade ever --" congratulations. "bought valero, it's down more than two bucks a share.
what's pulling it down?" >> what are you laughing at? >> we were so happy he was in his first trade and it so disheartening that his first trade is losing so far. what do you tell james? >> there's actually something good. the first thing being a loser is not the worst thing in the world. if you have winners, you believe your own -- >> you get cocky. >> i didn't curse. >> i didn't curse. >> we've been talking about valero at tens of dollars. he went into it unfortunately -- >> what do you do now? >> you have to have an exit plan. you can't say, the stock is down 6% -- i get out of half and re-evaluate. >> this is for dan. mike asks, are the mo mo stocks final limb leading the market lower? >> yeah, i would say all mo mo stocks are not created equal. you threw netflix in there, they're in a different category than google or goldman. google's been a massive ben niche area from the money coming
out of apple. sales above 20%, trades at 27 times. google is fine. netflix, untradeable. >> and goldman? >> i'm a seller up here. >> okay, first move tomorrow when we come right back. stay tuned. hello! how sharp is your business security? can it help protect your people and property, while keeping out threats to your operations? it's not working! yes it is. welcome to tyco integrated security. with world-class monitoring centers and thousands of qualified technicians. we've got a personal passion to help your business run safer, smarter, and sharper. we are tyco integrated security. and we are sharper. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan.
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